JANUARY 14, 2020
When
this piece first appeared two days passed we called Wells Fargo a “San Francisco train wreck…Don’t Buy…We sold.” This morning WFC reported a nearly 55% drop in profits, and announced a set aside of $1.5 billion to cover corrosive on-going legal costs. This legal war chest is required to wage combat with regulators and victims of their latest sprawling fraud.
Yet another mindless crime spree. The panoramic reputational damage now plaguing the bank was created by Wells Fargo’s fabricating of millions of fake accounts, and then systematically defrauding and stealing from those very customers, all of whom trusted them. Now the bank, again, asks for your trust. We knew they were soulless pirates prior to purchasing share. We’re ashamed. What’s new CEO Scharf saying?
“Wells Fargo is a wonderful and important franchise that has made some serious mistakes and my mandate is to make the fundamental changes necessary to regain the full trust and respect of all stakeholders.”–Charles Scharf, CEO, Wells Fargo.
It seems likely that Wells’ main interest lies in appealing to federal regulators, under whose thumb they operate. The bank’s unbroken chain of crime more than proves that they possess zero functional respect for customers, shareholders, or the rule of law. An hour into Tuesday’s session WFC shares are trading at $50.39, -3.3% down on heavy volume, likely to exceed 3x the six month daily average. Going down.
**NOTE: The above update launched a single hour into Tuesday’s session. WFC finished that session -5.39% down. An hour into after-hours trading volume was just under 3X the six month daily average. Closing % change metrics are calculated close to close, previous day to current.
JANUARY 12, 2020
Business
is sober serious stuff, real business anyway. Ninety-one Fortune 500 companies, doing sober business, paid no federal taxes at all last year. That’s sobering, and serious if the country’s going to pay its’ bills. Strippers pay bills and may be sober, and serious to anyone watching, or paying.
What about Silicon Valley startup Turvo software, “Collaborative Logistics.” Back in May Turvo sobered, and then got serious about firing their CEO Eric Gilmore for expensing $76,120.00 over three years for business. Stripper business. That’s business, if you’re stripping. Stripping comes straight off the top of any sober tax bill. Is that how we explain the ninety-one?
Wells did do a lot of serious stripping, after they were caught defrauding, fabricating, and stealing. Wells stripped it’s mortgage wing bare. Then they wanted more. But that’s not all they’re doing. And Boeing? The curtain’s been stripped back on company emails. Should you want any of either? “Show Time. Wells Fargo & Boeing. You Get Paid For This?”
Stark
lightening-strike love isn’t the only human circumstance that can result in failure or farce. Ask Wells Fargo. Right. Never stop ridiculing the crude stupidity of this San Francisco train wreck. Does it really matter who’s running it? The fraud known as Wells Fargo rolls out new antics on a regular basis. Now the banks drawn congressional criticism for attempting to pass on to vendors the costs of their crimes.
Wells Fargo & Co WFC: NYSE
At
one time Wells thrived on a vast rolling lawn of mostly cozy home mortgages and routine banking. Then they discovered fraud and made it their mainstay. They created and stole from everyone and now sport a revolving door to handle the traffic: CEOs, employees, and the federal regulators who yet oversee their every move.
Wells latest gaffe? Wells requested that 14 of it’s IT vendors “rebate” 2.5% of revenue earned back in 2018. Apparently, last summer the bank sought cash back from the innocent because said vendors benefited from increased business due to the bank’s fraud. Freshman congress woman Katie Porter wrote new CEO Charlie Scharf. What’d Wells have to say? Participation in the voluntary program would not be considered when awarding future contracts.
When the financials got a bid WFC surged from their basement $45 straight to $54 and slammed into their ceiling. In a stall they linger around $53. WFC reports on Tuesday. Don’t buy.
Following WFC’s fun run up to $54 the price-action has frozen into a sheet of ice. Wells reports on Tuesday. Consensus estimates are looking for a 4.1% revenue contraction along with $1.12 sh. EPS, over last year’s $1.09. Remember that Wells crippled it’s mortgage lending business though massive firings–cutting it in half. Such devastation isn’t repaired in a quarter. Talent and experience are never replaced overnight. Boeing will face the same when restarting the Max production line. The median 12 month price target is now $55. Shares trade at $52.52 now. We sold WFC.
The Sad and the Preventable?
The
jaw-dropping 737 MAX events display the range of human frailty, from tragic loss, scandal, and finally farce. The tragic crash of an Ethiopian MAX in March focused global attention. Almost instantly events wound directly into the convoluted relationship between Boeing and the FAA, and the truth only grew more stunning from there.
Boeing Co BA: NYSE
Last
week brought revelations of more foreknowledge of the Max’s flaws. A company insider stated htat the Max was an aircraft “designed by clowns and run by monkeys.” The 737 program went operational on April 9th, 1967. That aircraft looks nothing like the modern variants. Yet the core basics remain, now more than half a century old.
A long-time Boeing insider clarified that the Max was a rush job, sold first, and engineered after. Aircraft sales are predicated on specific performance requirements, in this case ones the fifty-year-old 737 platform was never designed to meet. Larger engines were retrofitted forward on the wing to meet operational requirements and accommodate ground clearance. Forward engines transferred weight toward the noes, thus the ill-fated MCAS auto-nose-up system.
Late last year the increasingly irrelevant WTO ruled that the EU continues to subsidize Airbus, thus U.S. tariffs are a legal course of response. Few in the business believe such action would dissuade on-going EU support for one of the blocks highest profile companies. In 2019 Airbus canceled it’s A380, a monstrous hub-to-hub aircraft, the double-decker variant capable of carrying more than 900 passengers.
The aircraft was designed from scratch, and canceled becuase none were sold for more than a year. Mere weeks back Boeing announced the halfting of it’s Max production line. BA now has over 400 parked undelivered on the tarmac in Renton Washington. They’ve lost $4.4 billion a quarter on this plane alone since March. The production halt will ripple through more then 600 suppliers as well.
Boeing
will face Max problems for years. It’s share price will suffer. Again, the company’s paid $4.4 for undelivered aircraft. Airlines will expect compensation. The public will push back against the Max once it finally returns to work. How long will that be? There’s yet another useless guess everyday. And then there’s the C Suite. Muilenburg’s departure only begins the process of rebuilding leadership and trust. Wells dwells in precisely the same space. Both are damaged companies best avoided. As always good luck and good investing.
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